Bytecoin (BCN) is currently being accused of coordinating a sophisticated scam aimed at fraudulently inflating their own price, only to have it drop moments later (known as a pump and dump). As a result of this, CoinMarketCap has taken to partially delisting the coin, as well as other exchanges too.
Bytecoin successfully managed to achieve a 400% increase in price from May 8, 2018, to May 9. This was largely due to its recent listing on Binance. Bytecoin is reported to have paid a sum of over $600 million worth of BCN to Binance in exchange for being added to the site. Note that paying to get listed on an exchange is generally a standard practice and only becomes suspicious when the money is traced back. There are questions as to how the Bytecoin team was able to acquire such a vast amount of money, with many coming to the conclusion that they printed, or created, more BCN so that they could pay. However, this may not actually be the case, the fact of the matter is that Bytecoin is premined, with a significant portion still in the hands of the creators.
To truly understand why people are considering this a scam, we need to discuss everything that happened in the space of just one day.
Before Binance, BCN was already listed on both HitBTC and Poloniex. At the time that the news broke of it being listed on Binance, its price began to rise significantly (this is normal for most coins as Binance is the number one crypto exchange). When BCN reached Binance, its price continued to shoot upwards, only now it began to look artificial. Take a look at its price chart for May 8, and you will see the BCN price rise in the form of an almost perfectly straight line.
This massive price increase was only noticeable on Binance and did not replicate on HitBTC or Poloniex, suggesting that market manipulation was happening on the exchange. During this situation, withdrawals were disabled on HitBTC and Poloniex, and the BCN web wallet became non-functioning. Altogether, this meant that people were unable to withdraw their Bytecoin or convert it to fiat. This led to a number of transactions taking place on the Bytecoin network to grind to a halt, with only a fraction of its usual amount of blocks being mined. Yet somehow during this reduction in transactions, there was enough activity on Binance to allow for an extreme increase in price.
Since then, the price has returned to normal, with some withdrawal options and web wallet features back online. People are now left pointing the finger at various organizations, blaming them for market manipulation. Many are arguing that Bytecoin designed this situation themselves so that they could sell their holding for large sums. Some are also accusing Binance of being complicit, as well as possibly HitBTC and Poloniex.
This situation reveals how little trust the community has in its major exchanges. It shows just how much work these exchanges need to do to form a worthwhile relationship with their audience— and if any of them did take part in market manipulation, they should no longer be operational. We need to focus on exchanges such as RightBTC and ETERBASE that are placing the interests of their customers at the heart of their business. For instance, ETERBASE is working towards creating the most robust, user-friendly experience the crypto industry has ever seen, and RightBTC is officially running to represent the people of the Tron community in the Tron Super Representative elections. Hopefully, exchanges like these bring back the trust of the cryptocurrency community and can further aid in the industry’s adoption.
Right now, Bytecoin has currently being delisted on most exchanges, pending several investigations.
Kai is a cryptocurrency copywriter and professional trader. He can often be found investigating various cryptocurrencies, whitepapers, and blockchain technologies. Kai has been a professional writer for 5+ years, and has invested in 50+ different coins and tokens. He also currently studies Law and Philosophy at university.